Why manufacturing companies in South Korea are moving to India


Even before the coronavirus pandemic forced the world economy to plummet to dreaded levels, there was a raging trade war between the United States and China that pushed South Korean companies to explore options of setting shop in India from China.

There has been a widespread negative perception about China in the recent years and the reports of the communist country’s mismanagement of the COVID-pandemic has only added fuel to the fire. The going has become tough for companies in China, the result of which has seen a number ofKorean establishments pulling out of the country in a bid to look for ‘favourable’ nations like India.

Industry experts in India believe that if the government and the sector play their cards right, this phase could see India emerge as a powerhouse and pose a strong challenge to the Chinese domination.

One of the biggest reasons why companies have turned towards India is the corporate tax in the country – it is the lowest in Southeast Asia. In September 2019, the Indian government slashed the rate of corporate tax from 30% to 25%. Not only this, for companies who want to set up new factories on India soil, the tax stands at 15%.

Apart from this, the union cabinet announced a production-linked incentive (PLI) scheme for the electronics sector with an outlay of over ₹40,000 crore in March this year – a move that has seen a lot of excitement in the sector.

However, there needs to be a lot of work done as far as the infrastructure and the ecosystem is concerned.

“Had I been an advisor to the PM Modi, I would have advised him to induce investment from Korea. You need strong infrastructure, roads, highways, railways, good air quality, clean water, and also good education,” Shin Bong-kil, Ambassador, Republic of Korea (ROK) in India said in a recent conversation which was organized by the Confederation of Young Leaders.

This is an opportunity for India to step up and be counted. Post the China-US trade war which has then be followed by coronavirus pandemic, companies do not want to stay in China and they are looking to shift their manufacturing units to India.



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